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EUR/USD  starts the new trading week on the back foot, falling towards key support. 1.2660 is where the  recently broken uptrend began, and we are not too many pips from that level. Inflation figures  for September are dripping in from the various German states  ahead of the full release, and some interesting data is coming out of the US as well. Will the pair bounce at this critical level or fall back?

Here’s a quick update on technicals, fundamentals and sentiment moving the pair.

  • Asian session: The pair continued lower and remained depressed under 1.27.
  • Current range:  1.2660 to 1.27.

Further levels in both directions:

EURUSD September 29 2014 technical chart euro dollar at key support forex trading

  • Below: 1.2660, 1.2620, 1.2587 and 1.25.
  • Above: 1,27, 1.2750, 1.2820 and 1.2870.
  • 1.2660 is strong support – where the now broken uptrend began.
  • 1.2750 is key resistance, as it was a double bottom in 2013.

EUR/USD Fundamentals

  • 7:00  Spanish Flash CPI. Exp. -0.3%, actual -0.2%. Slightly better than expected.
  • 12:00 German CPI. Exp. +0.8% y/y, HICP exp. +0.7% y/y.
  • 12:30 US Core PCE Price Index. Exp. 0% m/m, 1.5% y/y.
  • 12:30 US  Personal Spending. Exp. +0.5%.
  • 12:30 US Personal Income. Exp. +0.3%.
  • 12:30 US  Pending Home Sales. Exp. -0.4%.

* All times are GMT.

For more events and lines, see the  Euro to dollar  forecast.

EUR/USD Sentiment

  • Is the lower value of the euro already pushing inflation higher?: This is the key question for the ECB. The euro has weakened significantly since peaking just under 1.40 back in May. At current levels, we might already see the euro-zone CPI rise from rock bottom levels, but perhaps it may take longer.
  • Fed favorite inflation figure in focus: The Core PCE Price Index is the Federal Reserve’s preferred measure of  inflation. As long as it is under 2%, the Fed will probably remain unconcerned about inflation and rather focus on unemployment. We have the NFP  on Friday, with a big buildup towards it.
  • Extended dollar rally: The US dollar takes only short pauses between its gains, that were most recently inspired by the  preparation of Yellen to  exit monetary stimulus. A fresh round of dollar buying hit weak currencies such as the kiwi as well as stronger ones such as the pound.  While each currency has a story of its own, the general trend is certainly dollar bullish and the euro is not one of the stronger currencies.
  • Draghi ready to act: This is not news, but the comments about being ready to do more, especially after the poor TLTRO, just provided another reason for selling  EUR/USD. It is unlikely that the ECB will  announce big new measures this  week, but more dovish words and more details about the ABS program are now expected, especially if inflation is low.

In our latest episode, we talk about Contango vs. Backwardation, Scottish reverberations and key US data:

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